Mini-budget measures not enough to curb fiscal deficit: Moody's.

KARACHI -- The country's fiscal deficit is likely to reach six per cent of GDP during this fiscal year as the government has failed to introduce measures to curb expenditure and increase revenues in the supplementary finance bill announced last week, noted Moody's on Thursday.

The mini-budget will foster exports and support the country's manufacturing sector but ignored spending cuts or measures to increase revenues eroding government's ability to meet the deficit target of 5.1pc, added the note.

The financial services company expects the fiscal deficit to widen to 6pc as the revenue is expected to remain below earlier projections given placid economic growth and new incentives to boost revenues before narrowing to 5pc of the GDP by FY21.

According to State Bank of Pakistan's quarterly report issued on Wednesday, the fiscal deficit during 1QFY19 year increased to 1.4pc following marked slowdown in revenue growth as overall expenditure increases remain unchanged against same period last year despite significant cuts in federal and provincial development spending.

The report noted that on the expenditure front, major challenge was the steep rise in debt servicing payments.

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